Investors searching for passive income can find dividend stocks a superb option. Thankfully, the TSX has several high-quality, dividend-paying companies that continue to pay and increase their payouts for decades.
For instance, passive-income investors could consider investing in the shares of the utility company Fortis (TSX:FTS). This blue-chip stock has increased its dividend for five decades in a row. What stands out is that the company operates a low-risk business and expects to grow its dividend by 4-6% annually through 2028.
While Fortis is an attractive passive-income stock, here I’ll focus on two cheap Canadian stocks that pay monthly cash. With this backdrop, let’s look at two affordable Canadian stocks that pay monthly cash.
SmartCentres Real Estate Investment Trust
Investors seeking a steady stream of monthly passive income can explore investing in REITs (real estate investment trusts). The reason is that REITs boast a substantial payout ratio, given their requirement to distribute a significant portion of their earnings. This makes them a compelling choice for those looking to receive monthly cash. Within REITs, Canadians consider investing in SmartCentres Real Estate Investment Trust (TSX:SRU.UN).
SmartCentres Real Estate Investment Trust is Canada’s largest fully integrated REIT. It owns 34.9 million square feet of income-producing assets strategically located in prime Canadian locations. The stock is trading cheaply and offers a high yield of over 8% (based on its closing price of $21.08 on November 8).
What sets SmartCentres REIT apart is its exceptional tenant base, including prominent national and regional retailers, and its high occupancy rate. These attributes enable the company to generate strong adjusted funds from operations (AFFO), which supports its payouts. For instance, the company’s majority of tenants include top retailers like Walmart, which operates steady businesses. Further, SmartCentres REIT sports an industry-leading occupancy rate of about 98.2%.
In summary, SmartCentres’s retail-focused real estate portfolio, impressive occupancy rate, the development of mixed-use properties, and strong balance sheet position it well to consistently grow its AFFO and distribute monthly cash.
Pizza Pizza Royalty
Pizza Pizza Royalty (TSX:PZA) is another attractive stock for income investors seeking monthly cash. The firm owns and franchises fast-food restaurants operating under the Pizza Pizza and Pizza73 brands. Further, it primarily derives its income from royalties and places a significant emphasis on consistently enhancing its shareholders through increased dividend payments.
It’s important to highlight that Pizza Pizza Royalty distributes all its cash to shareholders while maintaining reasonable reserves. Additionally, it provides an enticing yield of 6.7%, making it an appealing choice for those seeking monthly income.
In the future, the company is poised to capitalize on the anticipated increase in traffic and will benefit from its ability to increase menu pricing. Furthermore, the square footage expansion of its restaurant network provides a solid foundation for growth, positioning the company to boost its shareholders’ returns through increased dividend distributions.
Bottom line
The reliable payouts and high yield of SmartCentres and Pizza Pizza Royalty make them solid investments to earn monthly passive income. However, investors should diversify their portfolios and must not invest all of their cash in one or two stocks.
